By Claudia Assis and Cynthia Lin, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures changed course Wednesday, posting gains as the dollar weakened.
Gold for August delivery added $2.80, or 0.2%, to $1,216.20 an ounce on the Comex division of the New York Mercantile Exchange.
The dollar index (DXY 83.24, -0.41, -0.49%) , which compares the U.S. unit to a basket of six currencies, fell 0.4%, sliding further into the red to 83.31.
The contract hit an intraday low of $1,206.10 earlier, and started the day in the red as investors were seen as sidelined and physical buyers as still tentative.
"We don't see much interest coming in," said Bernard Sin, head of currency and metals trading at MKS Finance in Geneva. Investors are largely sidelined amid quiet trading, and physical buying is light as the prices are still relatively too high, he added.
"Portugal's downgrade and huge trade deficit were one-day wonders and lack of follow-through disappointed traders" on Wednesday, said George Gero, a senior vice president at RBC Capital Markets, in e-mailed comments.
Gold rose 1.2% on Tuesday to close at its highest since June 30 after Moody's Investors Service slashed Portugal's bond ratings by two notches, rekindling worries over euro-zone debt issues. Investors also took cues from a widening trading deficit in the U.S. in May.
U.S. stock opened mixed despite a better-than-expected earnings report from chip giant Intel Corp. (INTC 21.69, +0.68, +3.24%) and fell shortly after a larger-then-expected drop in retail sales disappointed investors. In recent action, however, the major indexes posted modest gains. Read more about U.S. stocks here.
Gold futures had remained lower after the Commerce Department reported that sales at U.S. retailers dropped 0.5% in June, joining other evidence in recent weeks that has pointed to the economic recovery slowing down.
